Western banks wary of helping Russian privatizations: bankers

Tue Mar 22, 2016 1:21pm EDT
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By Oksana Kobzeva and Olga Popova

MOSCOW (Reuters) - Western investments banks with Russian operations are reluctant to advise Moscow on planned privatizations, three Western banking sources told Reuters, citing fears about violating sanctions imposed on Russia over the Ukraine conflict.

The caution illustrates the growing wariness of Western banks about getting involved in Russian finance deals even if they are not in areas directly affected by sanctions.

Last week a European Union official warned banks considering buying Russian government debt that they should ensure any investment is not a way of circumventing sanctions on Russian state-owned enterprises.

The Russian Economy Ministry last week sent requests for proposals (RFPs) to banks on advisory roles for the sales of stakes of 50.08 percent in oil firm Bashneft (BANE.MM: Quote), 10.9 percent in diamond miner Alrosa (ALRS.MM: Quote) and 10.9 percent in lender VTB (VTBR.MM: Quote).

Banks were told to respond by the close of business on Monday, March 21.

"We will not take part. We at first wanted to but talked to other European and U.S. banks and saw that none of them is going to," said a banker with a U.S. bank which received an RFP, speaking on condition that the name of his company was not disclosed.

If Western banks steer clear of the deals it is likely to make it harder for Russia to sell the assets at an attractive price as it will dim the interest of foreign investors who usually follow international banks' advice.

An alternative option would be to sell all or some of the stakes to a strategic investor. Based on current market capitalizations, the stakes could fetch around 430 billion rubles ($6.3 billion), Reuters calculations show.   Continued...

The Moscow office of Russian diamond miner Alrosa is reflected in the company's name plate in central Moscow, Russia, in this October 2, 2013 file photo.  REUTERS/Tatyana Makeyeva/Files